[SMM Analysis] Futures recover, driving phased transactions and limited arrivals, causing stainless steel inventory to stop rising and pull back.

SMM, July 16 – This week, stainless steel social inventory ended the prior inventory buildup trend, overall stopped rising and pulled back, with inventory pressure easing marginally. Total inventory in the two major markets of Wuxi and Foshan declined notably, from 943,700 mt on July 9, 2026, to 921,300 mt at the latest period, down 2.37% WoW, marking a phase reversal of the off-season inventory buildup trend.

During the week, SS futures strengthened and rose again, effectively repairing the previously weak market sentiment. Coupled with the reasonable room for traders to offer discounts after spot prices rose, the market mentality of “rush to buy amid continuous price rise and hold back amid price downturn” was concentratedly released, spurring phase restocking demand from downstream end-users. Transactions in the market recovered notably from the earlier sluggish pattern, and the destocking efficiency of supply sources improved significantly. Meanwhile, typhoon weather this week disrupted regional logistics and transportation, constraining the arrival pace. On-site spot supply replenishment was insufficient, further tightening circulating resources from the supply side. Driven by both the phase recovery in transactions and reduced market arrivals, these factors successfully offset the inventory buildup pressure from weak off-season rigid demand, pushing social inventory this week to steadily pull back. Overall, the strengthening futures that repaired market sentiment, traders’ concessions to stimulate shipments, and the typhoon weather that limited arrivals were the core drivers behind stainless steel inventory stopping its rise and pulling back this week. Although actual end-user rigid demand in the off-season had not yet materially recovered and sustained transaction momentum was still insufficient, short-term sentiment-driven factors and supply-side tightening provided an effective offset, effectively easing the previous inventory buildup pressure. Currently, off-season fundamentals still dominate the stainless steel market, with the long-term weak demand pattern unchanged, providing insufficient support for sustained substantial destocking. In the short term, inventory will likely maintain a consolidating pattern of moving sideways with mild destocking. Going forward, close attention should be paid to the sustainability of SS futures strength, the pace of end-user rigid demand recovery in the off-season, and weather and logistics disruptions to arrivals, to assess whether the destocking trend can continue.